Murthy’s comment targeting the VCs come at a time when the Indian startups ecosystem is facing a funding winter and has propelled companies to focus on profitability rather than only look at growth.
Shivani Shinde reports.
N R Narayana Murthy, co-founder of Infosys, blamed the venture capitalist community for inculcating a culture among entrepreneurs to chase growth at all costs.
He said the VC model of investment looked like a ponzi scheme.
“I would hold venture capitalists responsible who propounded the theory that only the top-line is important and not the bottom-line.
"I think that is completely wrong. In many ways it looks like a ponzi scheme.
"Investors say they are in series B, then go to series C, and sell shares to others at a profit, but it is the series Z fellow who is left with a tin box.
"Hence, I am not a critique of the younger people but of the older people, who have to be open and honest in saying things as it is,” said Murthy.
He was speaking at a fireside chat at the Nasscom Technology and Leadership Forum 2023.
In conversation with Kunal Bahl, co-founder Snapdeal, Murthy said it is the responsibility of seniors, in the case of start-ups and entrepreneurs, the VC who provide money to them, various advisors, and board of directors to tell the youngsters to ‘accept deferred gratification’.
“…to realise that sacrifice in the short and medium terms will give you much greater return over time.
"This has been the story of Infosys.
"We travelled the economy even internationally till we were a $1 billion company,” he added.
Murthy’s comment targeting the VCs come at a time when the Indian startups ecosystem is facing a funding winter and has propelled companies to focus on profitability rather than only look at growth.
VC who poured funds upwards of $40 billion in 2021, tightened their purse strings resulting in a drop of almost 50 per cent in funding for CY2022.
Murthy while talking at the sidelines of the forum also shared that in 2001 when the industry was impacted due to the dotcom bust, Infosys onboarded 1,500 freshers, even as the senior executives and board took salary cuts.
When asked about the recent delays in onboarding of freshers and in some cases even a salary cut at the fresher level, Murthy said that while he cannot judge others as he does not have access to data, he then shared Infosys example when he was at the helm.
"What I can say is what we did… we had given offers to 1,500 freshers and the think tank in the company sat and decided to take the largest salary cut for the internal board of directors, then the next salary cut for the next level, executive VP etc.
"Then we onboard everyone of the 1,500 fresher. I am glad to say that we are the only company which did it,” he shared.
His comments come at a time when several IT firms have delayed onboarding of freshers, have not visited campuses to hire from the CY23 batch and many have also looked to cut the salary of the fresher candidate.
When asked if ChatGPT will impact coders, his reply was an emphatic no.
“In 1977-78 there was a thing called Programme generators.
"Everybody said that youngsters would lose jobs, it didn’t happen… Human mind is the most flexible and can adapt very well,” he explained.
Murthy believes that ChatGTP provides one with a certain knowledge and they can show their creativity and smartness…but cannot replace the human mind.
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